Debt Bubble surpasses 300% of Global GDP

Both developed and developing nations collaborated to achieve a new record of debt, but developed nations are the biggest offenders with 142 billion euros while developing nations added almost 51 billion euros.

The debt of households, companies, banks, and governments worldwide added up to a total of 193 billion euros at the end of 2017.

The figure represents a new record after increasing by 13.7 billion euros in the first nine months of last year, according to data compiled by the International Finance Institute (IIF).

The increase in global debt in absolute figures, in relation to world GDP reached 318% of global GDP, three percentage points below the historical maximum of 321% registered a year before.

The debt issued by advanced economies added up to a total of 142.6 billion euros at the end of the third quarter of 2017, while the liabilities of emerging economies were 50.7 billion euros.

Debt held by households in developed economies reached 27.6 billion euros and 8.5 billion euros in the case of families from emerging countries.

On the other hand, the debt of companies at a global level reached 57 billion euros, of which 34 billion euros correspond to companies from developed countries and 23 trillion euros to companies from emerging countries.

In the case of banking, entities from developed economies owed 40.4 billion euros, while those of emerging economies accumulated a total of 7.5 billion euros.

Likewise, the global public debt in the third quarter of 2017 amounted to a total of 52 billion euros, compared to 49.3 billion euros recorded at the end of 2016.

Of this figure, the governments of advanced economies owed 41 billion euros and those of emerging economies 11 trillion euros.

In this sense, analysts at IIF warn that the simultaneous movement of several of the main central banks towards a certain tightening of their monetary policies for the first time in a decade can weigh the ability to face the service of their obligations in the case of highly indebted sovereign issuers.

“The highest rates represent a particular source of concern for those who have experienced a profound deterioration of their collection dynamics, including the United Kingdom, Japan, the US and Brazil,” the experts say.

In fact, the IIF warns that in the event that other countries emulate the tax cuts implemented by the US “could imply an added pressure on the debt and fiscal sustainability.”

H/t reader eric:

“I think we’ve just gone through the debt wormhole and exited into another continuum where debt is like trees in a forest of poverty, inflation and starvation.
Picture yourself on a boat on a river with tangerine trees and marmalade skies….it’s as surreal as that.”